How food delivery could derail home loan applications

YOUR MORTGAGE

By Gerv Tacadena | 3 DEC 2018

Homebuyers who frequently order food via apps like Uber Eats could be derailing their chances to get approved for a home loan as banks start to scrutinize spending habits to weed out those without financial discipline.

Gemmill Homes managing director Craig Gemmill told The Daily Telegraph that approval for homes has become quite difficult for many buyers, since even their dinner choices could raise a red flag for lenders.

“The banks are simply not lending anyone any money. It is across the board. It is first-, second- and third-home buyers. These people can’t get the funds,” he said.

Gemmill explained that the Australian Prudential Regulation Authority and the banking royal commission have been pressuring banks to tighten up their borrowing rules. Previously, banks only checked the incomes of prospective borrowers minus their big spending and exposure to credit cards — now, even their bank statements and how often they use food delivery services are being examined.

“Banks haven’t changed their guidelines, but they are just applying them far more stringently now,” he said.

Mortgage Choice chief executive Susan Mitchell shared similar insights, noting that borrowers would have to justify even small allotments for food, going out, hobbies, travel, and clothes.

However, she said there was no reason for buyers to become annoyed or even discouraged to apply for home loans. Buyers just have to be patient and stay updated on the policies offered by their chosen lenders, Mitchell said.

“It is now taking longer for a loan to progress from application through to settlement. Make sure you are organised before you apply,” she told The Daily Telegraph. “It’s not just a simple process anymore. Technology has been a real game changer. No one uses cash, so everything can be tracked when you use your cards.”